Weighing the Pros and Cons of a Living Trust
By K. Gabriel Heiser, Medicaid Secrets
Your aging loved one may have recently received an invitation in the mail to a seminar that will discuss “living trusts.” Your neighbor may have mentioned they set up a living trust at the suggestion of their attorney. So, what exactly are trusts, anyway, and who should use them for estate planning?
What Is a Trust?
Basically, a trust is a legal arrangement in which a person transfers the legal title to certain property (cash, investment accounts, real estate, etc.) to another person (the trustee) who agrees to hold that property for the benefit of a third person (the beneficiary) according to the terms of the trust document. In fact, the same person can wear all three of these “hats.” You can be the transferor of the property, the trustee and the beneficiary. However, the transferor no longer owns the property, the trustee does. That is the key to the benefits of a trust.
Such a trust can either be amendable and revocable (a so-called “living trust”) or unchangeable and irrevocable (usually the type used for Medicaid planning or tax planning purposes).
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